Tim Costello, chairman of the Australian Churches Gambling Taskforce, says Labor's position is an indictment on Bill Shorten's leadership. Photo: Michele Mossop

The Labor caucus on Tuesday resolved to support Coalition proposals which effectively unwind Gillard government measures to reduce gambling-related harm.

The Labor reforms included a requirement that machines be equipped with pre-commitment technology, which could be used to require players to set the amount of money they are prepared to lose before playing.

Other measures set to be abolished include requiring electronic warnings to be displayed on machines, a national gambling regulator and a $250-a-day cap on automatic teller machine withdrawals in gaming venues.

Tim Costello, chairman of the Australian Churches Gambling Taskforce, said Labor's position was an indictment on Bill Shorten's leadership.

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"It shows the absolute capture of both the government and the ALP by the clubs industry," Mr Costello said.

Labor's reforms, which passed Parliament in November 2012, were criticised as a watered-down version of the changes it promised independent MP Andrew Wilkie in return for his support in the hung Parliament.

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But anti-gambling campaigners had urged Labor to defend their reforms, warning that no future federal government would have the courage to tackle problem gambling.

Mr Wilkie said on Tuesday Labor's position was a "shocking betrayal."

"The Labor Party is weak and uncaring, and no better than the Liberals, when it comes to gambling reform," Mr Wilkie said.

Labor's spokeswoman on communities, Claire Moore, said the party believed problem gambling was a "very real and a very serious issue" and described Labor's 2012 reforms as "meaningful", but said the party had "more work to do" on what was "a very real and very complex issue".

"Labor will continue to work with stakeholders in a collaborative way to develop lasting solutions to problem gambling," Senator Moore said.

Introducing the changes last week, Minister for Social Services Kevin Andrews said the government wanted to take a new approach to problem gambling, which would reduce bureaucracy and duplication between Commonwealth, state and territory governments.

Independent Senator Nick Xenophon condemned both major parties on Tuesday.

"Can I just say, shame on the ALP, and shame on the Coalition for repealing even minimalist reform on the poker machine industry," he said on Tuesday.

He said the Coalition was effectively "throwing up their hands and saying this isn't a problem, leave it up to the states".

"You can't trust the states. It is a case of the states being Dracula in charge of the blood bank given that the states are the number one jackpot junkies around the country.

"They get something like $4 billion a year in poker machine taxes every year."

Greens Senator Richard Di Natale said he was "gobsmacked" and "bitterly disappointed" by Labor's decision to scrap its reforms.

"Labor still hasn't learned its lesson. They were booted out of government because people didn't know what it stood for and it's repeating the same mistakes in opposition.

"They have to learn that if they don't stand for something, they stand for nothing."